[Last updated: 1 January 2025, unless otherwise noted]

The following are the main types of takeover bids:

• takeover offer due to the increase in the controlling shareholder's interest. This is a mandatory offer that the controlling shareholder of a Brazilian listed company is required to launch if it has made an acquisition of free float shares of a given type and class which reduces the free float shares of that same type and class to less than 15% (or if, before the acquisition of the free float shares of a type and class, the free float shares of that same type and class was already less than 15%);
• takeover offer due to the transfer of share control. This is a mandatory offer that the acquirer of the control of a Brazilian listed company is required to launch. The acquirer is required to offer to the remaining holders of free float voting shares (and non-voting shares, if the company is listed on Level 2 or Bovespa Mais Level 2 segments of B3) the right to sell their shares for a price equivalent to at least 80% (or 100%, depending on the segment of B3 on which the company is listed or the provisions of its bylaws) of the price paid by the acquirer to the former controlling shareholder in the acquisition of the share control through a private transaction, added by the Selic Rate from the date of the payment to the seller until the financial settlement of the tender offer; and
• takeover offer for the acquisition of the share control of a Brazilian listed company. This is a voluntary offer launched by a potential acquirer aiming to acquire free float shares in the market in a sufficient number to acquire share control.

At least 10 days prior to the date of the auction of a takeover offer, any third party may file a competing offer for a price at least 5% higher than the price of the original offer. The original offeror and the competing offeror may increase their respective price offers, following the rules imposed by the CVM (e.g., in case of an offer for the acquisition of share control, the price cannot be increased at the auction).

Except in the case of a takeover offer for the acquisition of share control, a third party may interfere in the bid auction with the purpose of purchasing the shares which are the subject of the bid, provided that it notifies the CVM at least 10 days prior to the date of the auction and that it offers a price at least 5% higher than the price previously offered by the original offeror. The third party interfering in the offer may offer to buy less shares than those subject to the offer, except in the case of an offer made due to the increase in the controlling shareholder's interest or of an offer for the de-listing of the company.

4.1 Takeover offer due to the increase in the controlling shareholder's interest

Pursuant to CVM Resolution No. 215, the controlling shareholder of a Brazilian listed company is required to launch a takeover offer whenever it, a person related to it, or other persons that act jointly with the controlling shareholder make(s) an acquisition of free float shares of a given type and class which reduces the free float shares of that same type and class to less than 15% (or if, before the acquisition of the free float shares of a type and class, the free float shares of that same type and class was already less than 15%). This is a mandatory offer and requires the prior approval of the CVM to be launched.

The offer price per share must be fair and duly supported by an appraisal report prepared in accordance with CVM Resolution No. 215. The appraisal report can be discharged in certain specific cases set forth in CVM Resolution No. 215. Unless the appraisal report is discharged as mentioned above, the price must be at least equal to the appraisal value of the target company, added by the Selic Rate from the base date used by the appraisal report until the financial settlement of the offer, based on the following criteria: (a) weighted average trade price of the securities in the stock exchange, (b) book value, (c) discounted cash flow, (d) multiples comparison, and/or (e) other criteria accepted by the CVM.

Holders of at least 10% of the free float shares have the right to request the managers of the target company to call a special meeting of holders of the free float shares to decide on the revision of the offer price and preparation of an appraisal report by an appraising firm of their choice that meets the requirements of the CVM, if they understand that the price offered is not a fair one. This right applies regardless of whether or not the appraisal report was originally discharged, as mentioned above.

As an alternative to launching the tender offer due to an increase in the controlling shareholder’s interest, the controlling shareholder, those related to the controlling shareholder or other persons that act jointly with the controlling shareholder may (a) inform the CVM that they will sell in an organized securities market the shares in excess of the threshold amount within three months from the date of their acquisition, or (b) request from the CVM an authorization not to make a public offer due to an increase in the ownership of shares, provided that the controlling shareholder or those mentioned above agree to sell outside an organized securities market the shares in excess of the threshold amount within three months from their acquisition. If the shares are not sold within the deadlines set out above, the controlling shareholder must file with the CVM, within 30 days, a request for the registration of an offer due to the increase in the controlling shareholder's interest. This alternative proceeding may be used only once every two years.

4.2 Takeover offer due to the transfer of share control

As a general rule, the direct or indirect transfer of the share control of a Brazilian listed company through private transactions is conditional upon the acquirer launching a takeover offer for the acquisition of the remaining voting shares of the free float issued by the company, for a price equal to at least 80% of the price paid for each voting share that is part of the share control, added by the Selic Rate from the date of the payment to the seller until the financial settlement of the tender offer. Depending on the segment of B3 on which the company is listed, and on the provisions of the bylaws of the company, the public offer may also have to be made to holders of the non-voting shares and the price to be offered to the free float may reach 100% of the price paid for each voting share that is part of the share control.

The acquirer of share control may offer the minority shareholders the option to remain as shareholders upon the payment to them, by the acquirer, of the difference between the weighted average stock price of the shares subject of the offer in the last 60 trading floors prior to the beginning of the tender offer and the amount paid for each voting share forming part of the share control.

No appraisal report of the target company will be required except that, in case of an indirect transfer of the share control, (i) the offeror must submit to the CVM, along with the request for the registration of the public offer, a duly justified calculation of the price due in such public offer, prepared based on the price paid for the acquisition of the share control of the company, and (ii) the CVM may request the preparation and submission of such appraisal report.

Note that stricter requirements are imposed if there is a transfer of share control of companies listed within certain special trading segments of B3, i.e., Nível 2, Novo Mercado, BOVESPA Mais or Bovespa Mais Nível 2, in accordance with the listing regulations applicable to each respective trading segment.

4.3 Takeover offer for the acquisition of the share control

In general, the acquisition of the share control of a Brazilian listed company is made through private transactions. This is because most Brazilian listed companies do not have a dispersed ownership or a high free float of voting shares. The Corporations Law allows the acquisition of the share control of a listed company through a public takeover offer. This is a voluntary proceeding and it is subject to registration with the CVM, which will be automatically granted upon filing of the tender offer material, unless it involves the exchange of securities.

With the launch of this type of takeover offer, the board of directors of the target company will be allowed (or required, if the target company is listed on Novo Mercado or Nível 2 trading segments of B3) to present an opinion to the company's shareholders on the terms of the offer and whether the offer should be accepted or not. The opinion shall cover all aspects relevant to the shareholders' decision making process, including the offer price, and shall provide a description of the main changes in the financial situation of the company that have occurred since the last disclosure to the market of its financial statements or periodic information.

Where there is a takeover offer for the acquisition of share control which includes an offer to acquire all voting shares of the free float, the shareholders who decide not to sell their shares will have the right to sell them after the offer ends and for a period of 30 days thereafter, for the final price of the offer, added by the Selic Rate.

In takeover offers for the acquisition of such number of shares as to gain share control only rather than the acquisition of all shares of the free float of a particular class or type, the offerees may decide that they will only sell their shares conditioned upon the offer being successful. If the offer is not successful, the offeror will not be able to acquire shares by means of the takeover offer.